FISCAL MANAGEMENT TECHNIQUES.
DEVOLOPEMENT MANAGEMENT AND FINANCE Page 2
FISCAL MANAGEMENT TECHNIQUESPERFORMANCE BUDGETING
Management of on going activities and control of expenditure have, traditionally, been given priority in the process of budget formulation, and execution. The use of budget primarily to keep sending in check
well recognized as longas government functions were limited in scope and social value of public expenditure was
known. The budgetwas used for central control over inputs, such as, salaries, wages, travel expenses, materials and supplies, machineryand equipment, tool and plants, etc.The purpose of budgeting, however had to be redefined to conform to the changed view about the work andaccomplishments of public agencies, which came to be regarded as socially desired benefits
changedperspective, the task of budgeting came to be regarded as the effective marshalling of fiscal and organizationalresources for the attainment of benefits. The traditional budget formats and processes came to be considered asunsuitable for an active role of the executive in the implementation of governmental programmes. A major problemthought to be tackled urgently has been to ensure an effective use of funds made available to the Executive. The effectof all this has been to treat as insignificant the amount of none, spent on an activity unless it is considered in thecontext of complex inter-relations between ends and means, which could be best pursued through closer to attention tothe concepts of efficiency and economy. Budgeting in the changed situation, has come to be considered as a tool forthe implementation of government plans and programmes. It has been regarded as a process for systematicallyrelating the spending of funds to the accomplishment of planned objectives. The wide-spread concern with decision-making processes witness of late has interwoven in it the concepts of efficiency and economy. These concepts areintimate parts of the technique of performance budgeting.According to the concept of performance budgeting, the annual budget is in essence a work plan specifyingthe programme targets to be achieved by the agency concerned during the financial year. It emphasizes the purposesfor which provision of funds is made.Performance budget is a tool of management. It lays emphasis on accomplishments rather than means of accomplishments, it seeks to bring out what the government proposed to do. how much of it, at what cost, and withwhat results. Instead of highlighting objects of expenditure, in performance budget emphasis is laid on the purposes of government expenditure. Physical and financial aspects of each programme and activity are correlated by establishingrelationship between outputs and related inputs. The entire scheme of performance budgeting has to operate within theframework of clearly defined objectives which are sought to be achieved through successful implementation of thevarious programmes and activities undertaken by the concerned department or agency.